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09.18.12Professor Dana Brakman Reiser Addresses the New and Growing Field of Social Enterprises

What do Ben and Jerry’s, Better World Books, and Tom’s Shoes have in common? “They are all social enterprises—businesses that seek to achieve social goals using business methods that earn profits for investors,” Professor Dana Brakman Reiser explains in a recent interview.

The legal forms surrounding these entities remain unclear, and as a result, Brakman Reiser’s research and scholarship has expanded to address the legal and social ramifications of social enterprise. She defines a social enterprise as an organization pursuing social or charitable purposes, while making profits for investors. This new emphasis came about as a result of her research on non-profit governance and teaching her Corporations Class. She observed an interesting phenomenon—very few cases applied corporate law to non-profit governance issues, so courts and commentators frequently draw on for-profit corporate law as an analogue. She also found that social enterprises were forming in the U.S. and abroad. At the same time, jurisdictions around the globe began offering new legal forms to house social enterprises. In her last several articles she has explored these new legal forms, comparing and contrasting them with each other and with traditional nonprofit and for-profit forms of organization.

“The line between business and charity is fluid,” she says. “Both have a role to play to make society a better place.” She highlights these roles and how they can be encouraged and enforced in her forthcoming piece on social enterprise (Theorizing Forms for Social Enterprise, 61 EMORY L.J. __ (forthcoming 2012)).

She seeks to identify the goals of social enterprise founders who use hybrid legal forms, and questions the enforcement tools available to police these organizations. “Is a dual mission effective and stable?” she asks. “Can one organization accomplish both goals, and what kind of enforcement tools could work to ensure it would?”

Her article considers a range of possible private enforcement mechanisms, some already in use in hybrid legal forms now available in the U.S. and abroad. With her insights as a starting point, the debate awaits the results of the natural experiment that is occurring as jurisdictions enact and social enterprises adopt these new legal forms.